The growth of illegal gaming machines in the German market is now so acute that a study has forecast that – if nothing is done – by 2026 the number of illegal machines will overtake that of the legal models.
A study by DICE Consult, commissioned by the trade association VDAI, of the market and its trends since inter-state treaties on gambling came into force in 2012, finds that in 2022 there were 137,383 legal gaming machines in Germany, down from a ceiling of 211,887 in 2016.
Other market studies had put the German market in 2022 at 180,000 units.
DICE suggests that the 137,383 legal market machines in 2022, compared with between 58,336 and 116,672 illegal ones, were housed mostly in ‘coffee shops’ in the big cities.
Its report said that, at the current rate of penetration of the market, by 2026 an established base of around 250,000 machines will have between 45 and 62 per cent illegals. In fact, the black market is projected to overtake the legal machines by next year.
Since 2012, much of the responsibility for the operation of the German gaming machine industry in arcades and pubs has been in the hands of the 16 federal states and operated through an inter-state agreement. That, and several adjustments to regulations at a federal level, have effectively reduced the attraction of the legitimate industry.
Driven by concerns for player protection, the industry has been constantly beset with restrictions and this has, says the report, combined to encourage the growth of an illegal market.
Field studies by the Working Group Against Gambling Addiction are quoted in the report as saying: "Pragmatism must be accepted: the legal gambling offer must be attractive enough to be used by gambling guests.
"Illegal gambling offers generally exceed the limits of legislation and player protection in order to increase their attractiveness compared to legal gambling offers.
“When regulating gambling, the legislator is therefore required to take into account alternative movements to illegal gambling venues or illegal gambling media and to take measures to prevent them.”
Georg Stecker, CEO of DAW, the umbrella organisation of the German gaming machine industry, is on the record as saying: "The dimensions of the illegal market are now frightening; we all know that there is no protection for players or young people here. In order to effectively combat the black market, two things are needed: strengthened enforcement and a sufficient and attractive legal offer."
Much of the data appears in a recent major article on the growth of the illegal gambling market in Germany in the news magazine Der Spiegel. The legitimate industry is dealt with somewhat sympathetically in the article. It claimed that the black market is fuelled by decommissioned older machines that are "loaded with banned software by companies in eastern Europe."
The illegal market, said Der Spiegel, is housed in "thousands of amusement arcades disguised as cafes and bistros." Between them, said the magazine, they enjoy a tax-free turnover of between €3bn and €6bn.
